Sensex jumps over 500 points, Nifty above 24,200 despite rising oil prices and Iran supply disruption risks

The Indian stock market traded higher on Wednesday, with Sensex and Nifty rising up to 0.7% after an unexpected slowdown in US inflation scaled back expectations for the Fed’s interest rate hikes, boosting global markets.

Sensex gained around 540 points to 77,592 while Nifty 50 rose 150 points to 24,202, as seen at 9.35 am on Wednesday. The came as volatility measure India VIX dropped over 3% to 13.31.

Asian Paints, Bajaj Finance, Axis Bank, Bharti Airtel, IndiGo and Reliance Industries shares gained around 1% each to lead gains on Sensex, while IT stocks including TCS, Tech Mahindra, HCL Tech and Infosys dropped up to 2% to lead losses on the benchmark index.


The renewed optimism was broad-based, with Nifty Midcap 100 and Nifty Smallcap 100 indices gaining up to 0.6%. Sectorally, Nifty Financial Services, Nifty Private Bank, Nifty PSU Bank and Nifty Auto gained nearly 1% each, while Nifty IT dropped over 1%. The overall market breadth was positive, with NSE seeing 1,847 advances and 565 declines, while 96 stocks remained unchanged.

The US headline consumer price index fell 0.4% in June, its ⁠first decline ‌since the COVID-19 pandemic, while annualised core inflation of 2.6%, as against expectations for 2.8%. South Korea's Kospi surged 7%, while Japan's Nikkei rose more than 1%.

What lies ahead?

Despite the renewed optimism, some caution is warranted. With the uncertainties in West Asia continuing and Brent crude trading around $86, there are no positives that can lift the market higher in the near-term, said VK Vijayakumar, Chief Investment Strategist at Geojit Investments.

US President Donald Trump’s notoriously irresponsible comments also continue, this time about a charge on countries for US assistance to ships transiting through the Strait of Hormuz, he noted, adding that Trump soon made a U turn on this, replacing the proposed charge with ‘investments in the US’. With this kind of leadership, total uncertainty has become the new normal, rendering investment decisions extremely challenging, he added.

“In India, there are other challenges like rising CPI inflation (4.38% in June) and deficiency in monsoon which has reached 18%. On the positive side, credit growth in the economy continues to be strong and demand in sectors like automobiles continues to be robust,” Vijayakumar pointed out.

The best strategy during totally uncertain and complex times like these is to remain invested and continue to invest in stocks in growth sectors which are fairly valued, according to the analyst, who said Q1 results of leading banks, NBFCs and auto stocks will be good. Digital platform companies are likely to report good growth numbers, he added.

Tech view on Nifty

The 24,200 level continues to be the immediate hurdle for the Nifty 50 index, said Rajesh Palviya, Head of Research of Axis Direct, who added that a sustained move above this could pave the way towards 24,350–24,500.

On the downside, 24,000, which coincides with the 20-day moving average, is a crucial support, and a decisive breach may accelerate weakness towards 23,900-23,800, according to the analyst. “Going ahead, developments around crude oil prices and the Strait of Hormuz situation will remain the key drivers of near-term market direction,” he said.

(With inputs from agencies)
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)